China’s solar industry, bolstered by strong state support and private investment, is now facing major challenges. While China leads global solar power installations, producing 80% of the world’s solar panels, it is grappling with foreign tariffs and a domestic price war.
China dominates the global solar market, with exports hitting $49 billion in 2023, according to Wood Mackenzie. Beijing’s investment of over $50 billion in solar supply capacity from 2011 to 2022, along with cheap raw materials and state-owned bank support, has fueled this growth. Lauri Myllyvirta from the Centre for Research on Energy and Clean Air noted that lower costs have made China the preferred destination for solar investment.
However, the industry is now facing oversupply. The United States has doubled tariffs on Chinese panels to 50%, while the European Union is investigating unfair subsidies. China’s domestic industry is also struggling, with a price war driving down earnings and a wave of bankruptcies hitting in 2024.
Solar curtailment—where supply exceeds grid capacity—has increased, putting further pressure on the sector. Fitch Ratings reported a four percent rise in curtailment in early 2024. Without upgrades to the grid, China’s renewable energy expansion will be limited.
China is seeking new markets, with exports to Asia now surpassing Europe. Solar exports to Africa jumped 187% in 2023, though Africa remains a small portion of overall trade. Analysts say China’s solar industry is in a restructuring phase, but it is expected to continue growing globally with a broader manufacturing presence.
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